Contract talks continued on Tuesday between the United Automobile Workers union and Fiat Chrysler Automobiles, which was selected by the union to be the first among Detroit’s three carmakers to negotiate a new national labor agreement.þþThe current four-year contracts between the U.A.W. and General Motors, Ford Motor and Fiat Chrysler expired at midnight on Monday. Fiat Chrysler and the union extended their contract on an hourly basis while talks continued; Ford and General Motors have extended their deals indefinitely. In the meantime, operations continued normally at Fiat Chrysler’s plants.þþAll three companies have been in negotiations with the union since July. But the U.A.W.’s president, Dennis Williams, surprised industry observers on Sunday by targeting Fiat Chrysler — which, because it is the least profitable of the three, is expected to have the toughest negotiation — to reach the first settlement.þþMr. Williams has said his top priority is to negotiate wage increases for veteran workers, who earn about $28 an hour, as well as entry-level employees, who earn from $16 to $19 an hour.þþThe union is seeking to close the pay gap between the tiers of workers, and possibly limit the number of lower-paid employees at each of the three companies.þþMore than 40 percent of Fiat Chrysler’s 36,000 union workers in the United States are entry-level employees — a sore point with union officials. By contrast, about 20 percent of the union members at G.M. and Ford are paid the lower wage scale.þþThose goals will be hard to reach at Fiat Chrysler. Because of the big number of entry-level workers, its overall labor costs are lower than those at G.M. and Ford.þþFiat Chrysler’s chief executive, Sergio Marchionne, has pushed to end the two-tier wage system. Instead, he advocates a single wage scale that falls somewhere in between the tiers.þþThe union, however, is unlikely to agree to any cut in wages for its veteran workers.þþMr. Williams may also try to negotiate a limit on the number of entry-level workers at Fiat Chrysler.þþBut one expert was skeptical.þþ“The union is not going to get rid of the two-tier system because too much employment is dependent on it,” said Arthur Schwartz, an industry consultant and retired G.M. labor negotiator. “But what they are likely to do is close the gap between the first- and second-tier wages.”þþMr. Schwartz said the union picked Fiat Chrysler to negotiate the first settlement because it is in the toughest financial shape of the three Detroit companies.þþ“They are not doing as well financially as G.M. and Ford,” he said. “If G.M. or Ford went first, it could be hard for Fiat Chrysler to match their agreements.”þþMr. Marchionne, for example, has been outspoken about the fact that Fiat Chrysler does not have the financial resources of its bigger rivals like G.M. He has also raised the possibility that Fiat Chrysler may seek a merger with another automaker to better afford new technology.þþThis year, G.M. rebuffed Mr. Marchionne’s attempts to open merger talks.þþBut by continuing to focus on Fiat Chrysler’s weaknesses and its need for a partner, Mr. Marchionne may be trying to leverage a less costly contract with the U.A.W.þþIn past negotiations, talks have routinely continued beyond the contract’s expiration.þþBut this year’s talks have been emotionally charged from the start, as union leaders have vowed not to make concessions as they did in previous deals.þþAlso, the union is able to strike any of the three automakers if negotiations reach an impasse. During the 2011 contract talks, the union was barred from strikes at G.M. and Fiat Chrysler as a condition of the government’s bailout of the two companies.þþThe lead union negotiator at Fiat Chrysler told U.A.W. members on Monday that no agreement was imminent.þþ“Although we have been meeting for months now, there are still many items of importance to be reconciled,” Norwood Jewell, a union vice president, said in a posting on a U.A.W. website.þþBesides wage increases and limits on entry-level workers, the U.A.W. is also grappling with health care issues.þþThe automakers are hoping to reduce health care costs in the next contracts, possibly by increasing what union members pay for doctors’ visits and drug prescriptions, something the union is expected to oppose. Mr. Williams has suggested, however, that he will consider structural changes in the way the companies spend on health care.þþHe has indicated he would support a cooperative system in which the automakers use their collective buying power to slash overall health care expenses.þþIn the past, the U.A.W. has negotiated a new deal first with one automaker, and then tried to overlay the same pattern agreement on the other two.þþBut Mr. Williams may be taking a different tack this time: first reaching a deal Fiat Chrysler can afford, and then trying to get better terms from Ford and G.M.þþ
Source: NY Times
